Indirection cost4/24/2023 It is the ratio between the total indirect costs of an applicant and some equitable direct cost base. Indirect costs are usually grouped into common pools and charged to benefiting objectives through an allocation process/indirect cost rate.Īn indirect cost rate is simply a device for determining fairly and expeditiously the proportion of general (non-direct) expenses that each project will bear. In simpler terms, indirect costs are those costs not readily identified with a specific project or organizational activity but incurred for the joint benefit of both projects and other activities. An indirect cost shall not be allocated to a final cost objective if other costs incurred for the same purpose in like circumstances have been included as a direct cost of that or any other final cost objective. After direct costs have been determined and charged directly to the contract or other work, indirect costs are those remaining to be allocated to the several cost objectives. It is not subject to treatment as a direct cost. Indirect Costs (definition extracted from FAR Part 31.2)Īn indirect cost is any cost not directly identified with a single, final cost objective, but identified with two or more final cost objectives or an intermediate cost objective. To facilitate preparation of an indirect cost proposal, shown below are (1) some definitions of the term "indirect costs," (2) a brief discussion of indirect cost rate structures and (3) a simple example of an indirect cost rate computation. Office of Acquisition and Logistics Management (OALM).NIH Contract Tool Box and External links.NIH Small Business Program Office Appointment & Inquiry Tool. ![]()
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